20 Nov 2006, Joe Morgan, Risk magazine
The LSE issued a statement on its website this afternoon which said the exchange’s board believed the proposal – which represents a 2% premium to the market price at close of business on 17 November 2006 – substantially undervalued the company and failed to recognise its unique strategic position among global exchanges and its powerful earnings potential.
However, Nasdaq remains in the lead of the race to purchase the London-based exchange, which can trace its history back to 1698. Nasdaq increased its stake in the LSE to 28.75% by buying a further 7 million LSE shares at 1,243 pence each.
Clara Furse, chief executive of the LSE, said: “We believe Nasdaq’s final offer fails to recognise the outstanding growth record and prospects of our group on a standalone basis, let alone the Exchange’s unique global position.”
The LSE used its statement rejecting the bid from Nasdaq to highlight the success the business has enjoyed over the past year. The LSE raised £22.3 billion in the year to October through initial public offerings (IPOs), 96% more than the same period in 2005, and more than any other exchange so far this year.
Chris Gibson-Smith, chairman of the LSE, said: “Given the Board’s unanimous view of the final offer from Nasdaq, I have rejected Nasdaq’s request for a meeting.”
Nasdaq said its purchase of the LSE would have created the world’s biggest exchange by number of listings, containing more than 6,400 listed companies with a total of £6.3 trillion ($11.8 trillion). The acquisition of the LSE would also have created the most active global equity market, with an average daily volume of 7.4 billion shares traded.